The lawsuit alleged that Compass Mining didn’t disclose to Bit River that it was only the “middleman,” not the owner of its customers’ machines.
A group of customers attempting to sue Compass Mining for over $2 million for failure to return their Bitcoin machines after cutting ties with a Russian hosting company, has had their case dismissed just a day after filing their complaint.
However, the judge has given the plaintiffs another two weeks to file a second amended complaint.
The original complaint stems from a partnership between Compass Mining and Bit River which was intended to allow Compass’ customers to host their machines at Bit River’s facilities to take advantage of “enterprise-grade, low-cost and low-carbon cryptocurrency mining facilities in Russia.”
In a court document filed with the United States District Court of Southern Florida on Jan. 17, the complaint stated that Compass Mining terminated its “relationships and dealings with Bit River” in April 2022 due to the sanctions imposed by Executive Order 14024 and alleges that the Bitcoin machines hosted at the Russian facility were never returned to customers.
The complaint argued an explanation that the mining machines’ return would violate Executive Order 14024 was “false” and said that Compass has “both the right and obligation to effect the return of its customers’ miners.”
The complaint then alleges that Compass was unhelpful in helping customers retrieve their stranded machines. Compass representatives told customers it is “unable to conduct or even facilitate” any business dealings with Bit River, according to the complaint.
When its customers had no option but to contact Bit River, the Russian firm allegedly passed the ball back to Compass, stating:
“From a legal point of view, Bit River’s contract is with Compass, and all equipment is owned by Compass. Thus you must address all questions directly with Compass.”
The court document noted that Compass should have told Bit River that they were “simply the middleman” and that the machines were paid for and owned by the plaintiffs themselves.
The complaint also alleges that Compass’ promise of its machines’ “uptime of 95%” was inaccurate, stating that it was actually “closer to 50-60%.” In some instances, miners were not online at all for weeks or months at a time.
In a statement to Cointelegraph, Compass Mining said it believed the filing had no merit as it was confident the filing would prove unsuccessful.
“We are investigating the matter. As of now, Compass Mining strongly believes that the filing has no merit and is missing key elements. Compass is confident that this spurious filing will not be successful,” according to a spokesperson.
Only a day after the filing was lodged, the Florida court dismissed the case with prejudice, due to “several deficiencies that prevent the Court from moving forward,” as per United States District Judge Raag Singhal.
This included the pro se litigant Jian Huang appearing on behalf of other plaintiffs, including corporate entities without the proper authorization. The complaint also failed to adequately allege the citizenship of the parties, which is essential to determine a court’s jurisdiction in matters.
The judge has allowed the plaintiffs to file an amended complaint “no later than February 3, 2023,” requiring all plaintiffs to sign the pleading and any corporate plaintiff to be represented by counsel. Should this not be rectified, the case would be dismissed without further notice, said the judge.
Update Jan. 19, 11:26 pm UTC: Added a statement from Compass Mining and information regarding the complaint’s subsequent dismissal in court.